Pay reform should include input from employees, stakeholders say

Federal pay reform will fail if employees have no role in the design and implementation of the new pay system, witnesses told House lawmakers Tuesday.

Lawmakers on the House Government Reform Subcommittee on Civil Service and Agency Organization examined proposals for reconstructing the 54-year-old civil service pay system. While opinions varied on the specifics of reform, all the witnesses agreed that buy-in from employees was needed for any new system to succeed.

"You have to have employees involved," said Chris Mihm, director of strategic issues at the General Accounting Office.

The Bush administration's fiscal 2004 budget proposal included plans to seek legislation to create a $500 million performance fund that agencies can tap to raise the base pay of high performers. These permanent salary increases would also increase employees' pensions and their agencies' Thrift Savings Plan contributions. Agencies would be required to submit plans to OPM that include details on how the money would be used to improve agency results and reward high performers.

The fund is part of the administration's plan to better align pay with performance, but on Tuesday witnesses testified that few agencies adequately measure performance now because there is little incentive for agencies to have good performance management systems. Critics of a wholesale change to pay-for-performance plans have raised concerns that managers' subjective judgment could taint employees' performance reviews.

"The merit systems principles should be at the heart of what we want to do here," said Dan Blair, deputy director of the Office of Personnel Management, in response to those concerns. "But we can't have one size fits all, it will have to be tailored to each employee…we want to make sure that employees know what's expected of them."

Hannah Sistare, executive director of the National Commission on the Public Service, told legislators that performance measurement could work with proper oversight by Congress and adequate funding to train managers and put credible performance management systems in place. Commission members spent last year studying the government's organization, outsourcing strategies and personnel systems before issuing 14 recommendations for improving the public service, including adopting a broadband pay system and demolishing the current job classification system.

"Agencies need to adopt systems that best fit their missions and needs," Sistare said.

Another facet of the administration's plan involves raising the pay cap for senior executives, while also giving executive branch appointees more control over career executives' salaries.

Starting with the Senior Executive Service is a good way to test the waters for personnel reform, Max Stier, president of the Partnership for Public Service, a Washington-based advocacy group, told lawmakers.

"It's the leadership group," said Stier. "It's a small group, about 7,000 people, and if you can't get it right with your executives, you're going to have a hard time doing it across agencies."

But Del. Eleanor Holmes Norton, D-D.C., and Rep. Danny Davis, D-Ill., questioned the need to reform the pay system without a clear understanding of what is wrong with the existing pay structure. "If we don't understand why the current system doesn't work, how can we design a new system that does work?" Davis asked.

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